Assessing the US Economy Under President Trump
President Donald Trump has been touting the state of the American economy as the midterm elections approach, claiming he has lifted wages, curbed inflation and added jobs. He often repeats, “We have the hottest country anywhere in the world.” While the economy is performing better than many expected after the “Liberation Day” tariffs were introduced in April 2025, those duties and the ongoing US‑Israel conflict with Iran have contributed to higher inflation, a burden felt by most households. An AI‑driven investment surge is also supporting growth, though a slowdown in that spending could pose a risk.
**1. Economic growth**
U.S. gross domestic product is expanding at an annualized 2.2 percent, according to the latest figures. Since the end of 2024, just before Trump began his second term, the economy has grown roughly 3.2 percent—outpacing all other G7 nations over the same period. The International Monetary Fund initially cut its forecasts after Trump announced a broad set of tariffs on April 2 2025, warning that import duties would dampen investment and consumer spending. However, Trump later eased many of those tariffs, reducing the expected drag on growth. In addition, large technology firms have poured money into artificial‑intelligence projects, including the construction of data centres nationwide. Business spending on data‑centre construction reached $5 billion in August 2026, nearly double the monthly level seen when Trump first returned to office.
**2. Inflation**
Inflation now sits at 3.7 percent, well below the 9 percent peak recorded in 2022 under President Biden, but above the 3 percent rate that existed in January 2025 when Trump took office. Economists estimate that inflation would have been lower without the tariffs re‑imposed after Trump’s return. The war with Iran has also pushed global energy prices higher, feeding into domestic price pressures. Diesel hit a record $6.52 per gallon in September, and staple groceries such as beef and coffee have risen in cost, while egg prices have fallen. Retailers warn that higher energy costs linked to the conflict could raise food prices at the checkout.
**3. Household income**
Median household income, adjusted for inflation, climbed 2.6 percent in 2025 to $87,460, the highest level on record. The Institute on Taxation and Economic Policy (ITEP) notes that several factors have offset this gain: Trump’s tax cuts, the expiration of subsidies that had lowered health‑insurance premiums, and price increases tied to tariffs and the Iran war. ITEP estimates that the middle fifth of households are about $1,700 worse off in 2026 than they would have been otherwise, while the lowest fifth are roughly $750 poorer. By contrast, the top 1 percent are estimated to be $12,560 better off, largely because of the tax reductions.
**4. Job creation**
Trump predicted that the tariffs would “flood” the United States with jobs as manufacturers moved production domestically. Since his return to the White House, the economy has added an average of 34,000 jobs per month, a sharp decline from the 122,000 monthly jobs created in the final year of Biden’s presidency. Manufacturing employment stood at 12.6 million in September 2026, slightly below the figure at the start of Trump’s second term. The unemployment rate remains modest at 4.2 percent, roughly the same level as when Trump resumed office. Part of the stability reflects a stricter immigration and deportation policy that has reduced the size of the labor pool, meaning fewer new jobs are needed to keep unemployment steady.
**5. Federal borrowing**
Government borrowing has risen during Trump’s second term, driven in part by his large tax cuts. The federal deficit reached $2 trillion for the year ending September 2026, about 6 percent of GDP.